Understanding the basics of bankruptcy in North Carolina is vital for everyone. It could be a lifesaver or at least give you solace when you are drowning in debt or trying to get compensated as a creditor during a legal battle. Let us look at the basics of bankruptcy and how to go about unsecured and secured claims.
In simpler terms, bankruptcy is all about making claims. Typically, The creditor files to get payments from the debtor, while the debtor files to request the court to discharge their debts or make it easier for them to settle their debts.
Before you take a loan, a creditor may want assurance that even if you can’t come up with their money in the end, they can take something of value that you own and sell it to pay themselves back. For example, failure to pay a mortgage can lead to the loss of the house.
When you file for Chapter 7 bankruptcy, the court might discharge all your debt, but the creditor will still have the right to take the property you secured with him. If you still want to keep the property, you can oblige to continue with your payment, i.e., if the creditor agrees, or you can reaffirm your debt by agreeing to owe them still even when the case is over.
The bankruptcy law applies differently to unsecured claims. As the name suggests, unsecured debts do not have any collateral that the creditor holds. In other words, the creditor doesn’t have the right to claim your property if you fail to satisfy a debt.
In this case, the creditor usually files a lawsuit against you. If they win, the court assigns a trustee to sell your non-exempt property and use the proceeds to pay your creditors. North Carolina has its specific exemptions; you may need to work closely with your bankruptcy lawyer to know how to go about it.
When To Seek Legal Help?
Contact your bankruptcy attorney before your file for bankruptcy. You must thoroughly assess what you have, what you might lose, the impact of bankruptcy on your credit, and how to recover when it is all over.